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Industry Spotlight > Women in Wealth

Inside UBS' Huge Diversity Push

By Jane Wollman Rusoff

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UBS Financial Services is forging ahead with a major thrust to become the industry leader in delivering a diverse financial advisor sales force aimed at expanding market share.

With programs to recruit and promote people of diverse ethnicities, the wirehouse wants its advisors to reflect the ongoing demographic shifts in the country, executive director Kenneth Correa, metropolitan market head and co-chair of the firm’s MOSAIC diversity network, tells ThinkAdvisor in an interview.

“This is a market that’s up for grabs,” argues Correa, a certified financial planner who oversees 250 employees, 140 of whom are FAs with total AUM of $25 billion, in UBS’s 200 Park Avenue branch office in New York City and its wealth management business in Bergen Country, New Jersey.

Focusing on Hispanics, African-Americans, Asian-Americans and women of all races, UBS is seeking to align with and avail itself of the significant shifts in population and wealth pegged to increase dramatically over the next 25 years. The way to reach and serve these segments is to employ more FAs of color as well as more female advisors, Correa says.

Indeed, Brookings Institution reports that “racial minorities” are “the primary demographic engine of the nation’s future growth, countering [a]…soon-to-be-declining white population.” It projects that in 2045, the U.S. will become “minority white,” when the proportion of Caucasians declines to 49.7%.

In the interview, Correa discusses initiatives designed to make the firm “look more and more like the demographics of the country.”

UBS’ Wealth Management Development Program, with the stress on next-gen FAs and which kicked off at the start of this year, emphasizes retention with compensation structured to “sustain” potential advisors “long enough to get into the profession,” according to a spokesperson.

ThinkAdvisor recently interviewed Correa, 41, a native of New York City whose parents migrated to the U.S. from Columbia in the late 1960s. In addition to discussing UBS’ efforts to be financial services’ leader in hiring culturally diverse advisors, he provided a five-year forecast for FA teams overall.

Here are excerpts from our conversation:

THINKADVISOR: How is the MOSAIC diversity network and your Wealth Management Development Program — focused on next-gen advisors — tied in?

KENNETH CORREA: We’re trying to increase the diversity within our financial advisor salesforce and to focus more and more on the next generation as a way for new advisors coming into our firm.

Why is diversity so important to UBS?

The first firm that figures this [issue] out — and we’re working very hard toward that — will be a firm that’s going to win because this is a market that’s up for grabs.

But these are big changes and big challenges.

Diversity is a fact; inclusion is a choice. All the firms are going to be challenged with: How do we make sure the look of the firms continue to shift with U.S. demographics? We’ve made a choice — and our choice is to continue to have our firm look more and more like the demographics of the country.

What are the biggest shifts?

The segments of wealth in the U.S. that continue to grow at exponential rates are women, Hispanics, African-Americans and Asian-Americans. Higher levels of education are coming for these sectors, and with that, compensation and purchasing power will continue to grow.

UBS has an emphasis on working with high-net-worth clients. With the demographic shifts, will you be making a change in the profile of your target client?

We not only have to think about the client of today but the client of tomorrow. Higher levels of education will [bring] higher levels of compensation. The stress on diversity doesn’t take away from our focus on the high-net-worth client of today. But it also focuses on the high-net-worth and ultra-high net worth client of tomorrow, and making sure that we’re ahead of the curve.

What’s MOSAIC’s mission?

To call attention to the societal issues in the U.S. and that we need to have a firm that looks more and more like the demographics of the U.S. Our goal is to create inclusivity across the firm.

How do you try to accomplish that?

We focus not only on hiring and creating a pipeline of both experienced and future financial advisors but retaining and promoting the diverse talent we currently have, so that we continue to [be aligned] with demographic shifts.

How are you trying to achieve that specifically?

I partner with our HR folks and professional development group to see what we can do to continue to drive more and more of our hiring into segments that maybe we as an industry haven’t necessarily looked at.

What are the most impactful demographic changes in particular?

At this point, 51% of the population is women, and 50% of advanced degrees are being obtained by women. About 18% of the country is Hispanic, about 13% are African-American, and Asian-Americans are about 6%. The purchasing power of each  group is growing more and more.

Why do you include women as a component?

The industry doesn’t have the female advisor presence that’s anywhere near the [corresponding] demographic of the country. On the wealth management side, the industry is [still] very traditional white-male dominated. But women control 52% of the wealth! And as baby boomers pass, a lot more of the wealth will be left to wives because [in the U.S.] men typically die about five years before women. So, as women’s wealth will grow even bigger, servicing them will become paramount to firms’ success.

Please talk about strong growth of the Hispanic segment.

The purchasing power of Hispanics in the U.S. is $1.7 trillion. That’s the second-largest in the country next to Anglos. In California, Hispanics are the majority — the largest ethnic group — and that’s followed by Texas. Across the country, Hispanics will have increasing wealth as time passes, especially in the bigger states. So their purchasing power will grow more and more. We need to service that.

By hiring more Hispanic FAs?

Most people tend to work with others that they can relate to, people who speak like they do. During my 20 years in the industry, I’ve found that women tend to work with women and people of color tend to work with people of color. So if you’re Hispanic and speak Spanish, you’ll be able to have a greater connection with [a Spanish-speaking FA].

Do you usually place advisors of diverse ethnicity on teams?

Yes, teams are a lot more productive than individual advisors — for many reasons. Whenever you’re hiring new advisors, whether of color or diverse backgrounds or not, you want to hire them onto teams. That’s where the puck is going. Five years from now, we’ll have a smaller industry made up of a lot more teams as opposed to individual practitioners.

Where do you look for candidates to expand the firm’s diversity?

I just had a meeting with the CEO of ALPFA, an organization of Latino financial and accounting professionals. We discussed what we could do for 2019 to continue to enhance the pipeline of key talent in that market. We also work with Jopwell, a company that introduces us to diverse talent, mainly African-American, to try to build a [conduit] for hiring at a more junior level — including financial advisors — who will continue to help change the face of our firm.

What are you doing in the way of college recruiting?

I’ve been to different universities, including Columbia and Bucknell, where I talked about MOSAIC [relating to] what we’re doing in the wealth management space and the demographic shift in the country and how it will continue.

What do you tell students about becoming an FA?

I’ve talked about how this noble profession is something that should be very appealing, especially for entrepreneurs who come from [diverse] segments looking to service their communities.

Thus far, how successful have you been with financial advisor diversity recruiting programs?

For female advisors, it’s been good. For advisors of color, the population is small — and that’s where the challenge comes in industrywide. The challenge has been finding seasoned people. So we [need to] continue to encourage young people coming out of college and business school to work in our industry.

What are chances that they’ll make that choice?

Maybe 5 or 10 years from now the pipelines of candidates of seasoned advisors of color will be a lot larger than it is today.

— Related on ThinkAdvisor:

Jane Wollman Rusoff

@jrusoff2

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